My FICO score dropped 40 points this month!!! Whats up with that?!?

Question

I have always had EXCELLENT credit. In fact, lately, I have been paying down my debt in full speed. I will easily be debt free in a few months. I have not made any credit inquiries lately, and have never missed a payment in my life. I keep track of my FICO score every month, so was very surpised at the sudden drop. I've checked my credit report in the last few months, but did not notice any erroneous information. Anyway, I am going to be shopping for a mortgage loan soon, so this is really bad timing. Any other suggestions as to why the drop would have been so extreme? I manage my money well, and this score just does not make sense to me at all. I went from 757 to 712 in a month! I can't figure it out.. I still have revolving credit, but have only been using one card. I have $0 balances on the rest. Why am I getting penalized so heavily?

I'm not maxed out or near the max on the card, but yes, it is Capital One that I am using.

Answer 1

Any chance the one remaining card is maxed out? Or did you move some balances all onto one low rate card?

Any balance over 50% of your available limit will hurt your scores.

Any chance your one remaining card is with Capital One? They don't report credit limits, so you'll often appear maxed out to the credit bureaus even if you have tons of spare credit. The bureaus are being sued right now over allowing Capital One to do this.

Either way, a 712 is a good score, and you should qualify for the best rates on almost any mortgage. Possibly higher rates if you need to use any type of no-income verification products, as those often have a price break above 720.

Answer 2

I have been paying down my debt in full speed. I will easily be debt free in a few months.
I manage my money well, and this score just does not make sense to me at all.

That is your answer. You are getting out of debt and managing money well. The good news is, if you keep it up, by the end of the year, you can have a cash emergency fund and start using the money that no longer goes toward paying off debts to BUY THINGS. When you pay cash, you don't need a "Forever In Credit Obligation" score.

Answer 3

Approximately 30% of your Credit Score is relative to Amounts Owed On Credit Accounts. It has to do with whether you manage your credit responsibly.

The fact that you are 'paying down my debt in full speed' may be the issue. What makes sense to you, as it does to me, may not make sense to the FICO Score.

Your feverish pitch in which you are paying down your debt may be seen as an 'unexpected interruption in income' in your near future by the FICO system. Hence it adjusts to allow for this possible negative time in your financial future.

Having revolving credit still available to you with 'zero' balances is yet another indicator by the FICO system that you may be anticipating a financial hic-up in your income.

Rather than paying off your outstanding debt quickly, consider depositing the 'extra' available money in a good high interest bearing savings account or money market account, while continuing to make your regular monthly payment, with a 'little extra', every month.

Once you get approved for your mortgage loan with the exceptional interest rate, then take the 'extra' money you have been putting aside in the savings account or money market account and pay those outstanding debts in full.

Once that is complete, consider applying those 'extra' payments towards your mortgage and pay your traditional 30 year mortgage in half the time.

Answer 4

i've got heard of the credit enjoying cards you're speaking approximately and that i'm individually skeptical approximately them. i think of they are focused on a definite form of human beings in debt. the perfect thank you to develop your score is to cut back the quantity of debt which you have and to pay the expenses which you have on time. additionally, the better your credit will become, the slower it rises. i'm 23 and that i've got had credit for 5 years. My modern score is around 750. to ascertain that me to get everywhere on the element of 800 i could desire to have appropriate credit for around 15 or extra years.